Statement of Daniel L. Hatcher, Senior Staff Attorney, Children’s Defense Fund

    Chairman Herger and Members of the Subcommittee, thank you for the opportunity to submit this statement for the record regarding child support and fatherhood proposals. The Children’s Defense Fund (CDF) is a private, nonprofit advocacy organization whose mission is to Leave No Child Behind®. We receive no government funds. CDF provides a strong, effective voice for all the children of America who cannot vote, lobby, or speak for themselves.

    The effectiveness of the child support program is now steadily improving, in large part due to the 1996 child support reforms. However, poor children in families receiving welfare or leaving welfare for work often receive little of the child support collected on their behalf. The success of the child support system is significantly reduced for poor children due to the continued use of child support to recover welfare costs, and due to the fact that low-income noncustodial parents often cannot afford to pay support.

    Last year, the House of Representatives overwhelmingly passed the Johnson-Cardin Child Support Distribution Act of 2000 (H.R. 4678) by a vote of 405-18. Billions of dollars in child support would have been re-directed to children. The Act would have also provided funding for much-needed programs to help low-income noncustodial parents improve their economic status and provide better support for their children. H.R. 4678 was referred to the Senate, and a similar Senate bill was introduced. Unfortunately, the Senate did not take action on the bill.

    The Johnson-Cardin Child Support Distribution Act has been reintroduced in the House this year (H.R. 1471), and is also incorporated into the Act to Leave No Child Behind (H.R.1990/S.940), an omnibus bill for children supported by the Children’s Defense Fund and many other organizations and child advocates. It is crucial for Congress to act quickly on this legislation. As TANF time limits run out, and more and more families continue to try to follow the rules of the new welfare law and work towards family independence, the child support system must be changed to support, not hinder, the efforts of custodial and noncustodial parents to support their children.

Performance of the child support program is improving.

    Child support enforcement tools have been strengthened in recent years. Wage withholdings were made mandatory in 1988, and then were made more effective when the National Directory of New Hires was established in the 1996 welfare law, the Personal Responsibility and Work Opportunity Reconciliation Act ("PRWORA"). Employers must now report all new hires to state agencies that then transmit the information to the National Directory of New Hires. Child support offices can then check the directory against a list of noncustodial parents with overdue child support. After a match is made, a wage withholding order is issued to deduct automatically child support payments from the noncustodial parent’s paychecks.

    PRWORA also required each state to implement centralized computer systems for collections, made improvements to paternity establishment, and provided uniform interstate child support laws to address enforcement complications that exist when multiple states are involved.

    With the strengthening of enforcement tools and increased recognition of the importance of child support for child well-being, the performance of the child support program has improved. $15.8 billion in child support was collected in 1999, a 10 percent increase over fiscal year 1998, and according to the U.S. Department of Health and Human Services, that number reached $18 billion in fiscal year 2000. Paternities were established and acknowledged for 1.5 million children in 1999, about a 220 percent increase over fiscal year 1992. The child support collection rate has doubled since 1995.1

Continued improvements are needed to help low-income children.

    Low-income children of current and former welfare recipients have the greatest need for the additional family income possible through the receipt of child support payments. The child support program can have a significant anti-poverty effect – when it is successful in getting support payments to families.

    Unfortunately, the bulk of the collections are not reaching those children with the greatest needs. Almost two-thirds (63 percent) of the IV-D child support caseload is made up of current and former welfare recipients, but the majority of the funds collected in FY 1999 were for families who have never received welfare assistance. Of the small percentage of owed child support that is collected for current TANF recipients (9.3 percent), very little actually gets to the families – the government kept $1.3 of the $1.5 billion collected in 1999. Former TANF recipients are getting more of the child support collected on their behalf ($3.8 billion out of the $4.83 billion collected), but still over $1 billion of the amount collected did not get to the children in families struggling to leave welfare for work.5

The 1996 welfare law has made the cost recovery purpose of the child support system obsolete.

    In 1996, PRWORA changed the AFDC welfare program to encourage family financial independence. Child support was seen as an important part of a single-parent family’s income package. As a result, the child support program began to shift its primary purpose from recovering welfare costs to encouraging both parents to support their children and actually getting child support to the custodial families.

    Unfortunately, the federal law requiring families who need temporary public assistance to assign their child support rights remains, along with a complex set of child support distribution rules. The assignment and distribution rules are now in conflict with the goals of encouraging family independence and support for children from both parents.

The current child support system withholds support owed to children who need it the most – those in families struggling to make ends meet who have had to rely on public assistance.

    Families needing TANF must assign their child support rights to the government under the outdated notion of welfare cost recovery. The effect is that child support collections are then withheld from the children, kept by state governments, who in turn pay a share to the federal government. Children often get nothing.

    States do have the ability to give some child support back to families after assignment, but only after they pay the federal government its share. Currently, only a small amount of the child support is given back.

    The Johnson-Cardin bill provides states with options and incentives to create child support pass-through and disregard policies to promote the goal of family financial independence. States can opt to pass through up to $400 a month in child support collections to a family receiving TANF; to the extent that the payment is disregarded in calculating TANF benefits, the state does not have to pay the federal government its share of the amount collected. Passing through at least a portion of the current child support collected ensures a smooth transition when families move from welfare to work. Often, when families do not receive any child support while on welfare, there is a considerable delay in starting direct child support payments after the family leaves cash assistance. Child support payments made directly to the family during and after TANF receipt prevent a delay in benefits during the critical period of transition.

Intercepting tax refunds is the most effective way to collect past due support for families leaving welfare – but the money is often withheld from poor children.

    When families are able to leave welfare for work, the assignment of child support stops. The transition to work is a critical time where families desperately need the extra income from child support payments to achieve economic stability and avoid the need to return to welfare. In addition to the need for reliable ongoing current support payments, effective ways of collecting past due child support owed to families leaving welfare are essential. At the end of 1999, $34.5 billion in arrears was owed for families who formerly received public assistance.6

    Intercepting federal tax refunds owed to the noncustodial parent is an increasingly successful method in collecting this past due child support. Tax intercepts account for the majority of back support collections made on behalf of families who have had to rely on public assistance. For many low-income families, where noncustodial parents’ work is intermittent and child support payments irregular, intercepting federal tax refunds may be the only real chance they will have of getting past due child support.

    Unfortunately, the child support system is taking this effective enforcement tool away from poor children. When families leave welfare for work, the assignment of child support stops but past due child support is still often owed in part to the government and in part to the family. Under current law, past due child support collected by federal tax refund intercepts is kept by the government to pay itself first - even when most of the child support is owed to the children.

Example (hypothetical): an eight-year old girl is owed almost $20,000 in past due child support (from a $200/month order that has never been paid). The girl’s mother lost her job and eventually needed temporary public assistance last year – at that point, the girl had to begin assigning her right to child support to the government. The family left public assistance after just 6 months, and the child support assignment then stopped - the government is now owed $1,200 in assigned child support, whereas $20,000 plus current support is still owed to the girl. If a $600 federal tax refund is intercepted this year from the non-custodial father, the government would take all of the money from the child to pay itself first.

    As the example illustrates, the practice of the government paying itself first from intercepted federal tax refunds can result in much-needed additional child support income being withheld from families at the critical time of their transition to work. H.R. 1471 would change the child support distribution rules to ensure that child support collected through federal income tax refund intercepts is paid to families leaving TANF before the government takes its share.

Withholding child support from the children on whose behalf it is collected further divides already fragile families.

    Children in low-income families experiencing separation or divorce need emotional and financial support from both parents. Most poor mothers and fathers want to do right by their children, and work together to support their children - yet the child support system itself can sometimes stand in their way.

    When poor noncustodial fathers7 are able to pay child support, they want to know the money is getting to their children. Noncustodial fathers become more alienated from their families when they must struggle to pay child support they know is being kept by the government. Some noncustodial parents will risk incarceration by providing money to their children directly, rather than paying government-owed support payments. Many noncustodial parents simply decide to pay nothing and avoid contact with their children.

    When poor mothers and fathers attempt to reunify and raise their children together, the system of assigned child support can significantly block their efforts. Parents that reunify are often still stuck with making payments to the government in the name of "child support," because of past due child support that was assigned to the government when one parent received welfare during the period of separation.

Many noncustodial parents are poor and face barriers to employment.

    For many low-income families who have had to rely on welfare, the noncustodial parents are often poor as well, limiting their ability to pay child support. Poor fathers may face multiple barriers to employment, including lack of training and education, incarceration and criminal records, lack of transportation, disabilities, and substance abuse.

    Poor fathers facing such barriers to employment may accumulate significant back due child support. The problem of large child support arrearages is heightened when states add Medicaid childbirth costs to the initial order, which can amount to thousands of dollars. Large child support arrearages may then create an additional barrier to legitimate employment. Faced with seemingly insurmountable arrearages, fathers may work in the "underground" labor market.

    H.R. 1471 would prohibit welfare cost recovery for Medicaid birthing costs, to reduce the creation of large state debts that may reduce the likelihood of low-income noncustodial parents paying current support. H.R. 1471 would also provide funding for demonstration projects to work directly with "dead-broke" low-income noncustodial parents to help them support their children financially and emotionally. The funding would create a competitive matching grants program for projects to promote marriage and successful parenting, and to address barriers to employment and improve the economic status of low-income noncustodial parents.

H.R. 1471 provides Congress the opportunity to stop the child support system from withholding child support from poor children, and to provide needed services to help poor noncustodial parents better support their children.

    H.R. 1471 provides a tremendous opportunity for Congress to fix the child support system in order to get more child support distributed to families who have had to rely on welfare, and to provide much-needed services to low-income noncustodial parents. It is crucial for Congress to take immediate action and seize this important opportunity to help families struggling for financial independence – by making child support more about truly providing support to children, and providing services to poor noncustodial parents to help them become better able to provide that support.

1 Data is from U.S. Department of Health and Human Services press release, "HHS Announces New Record Child Support Collections" (January 17, 2001), the U.S. Department of Health and Human Services, Child Support Enforcement FY 1999 Preliminary Data Report (September, 2000), and an analysis by Vicki Turetsky, "Families Participating in the State Child Support Program," (Center for Law and Social Policy, 2001).
2 U.S. Census Bureau, Child Support for Custodial Mothers and Fathers, P 60-212 (October 2000).
3 Vicki Turetsky, What if All the Money Came Home? (Washington, D.C.: Center for Law and Social Policy, June 2000).
4 Office of Child Support Enforcement, U.S. Department of Health and Human Services, 1999 Report to Congress: Analysis of the Impact of Welfare Recidivism of PRWORA Child Support Arrears Distribution Policy Changes (Washington, D.C.: U.S. Department of Health and Human Services, 1999).
5 Paula Roberts, "The Performance of the Child Support Enforcement System: Two Points of View," (Center for Law and Social Policy, November 2000).
6 Office of Child Support Enforcement, U.S. Department of Health and Human Services, Child Support Enforcement FY 1999 Preliminary Data Report (Washington, D.C.: U.S. Department of Health and Human Services, 1999).
7 This testimony often refers to noncustodial parents as fathers for purposes of simplicity, and because the majority of noncustodial parents are men. There are also many female noncustodial parents and male custodial parents.